The West’s political and social model is in crisis - but emerging
internet technology will make it possible to survive without big government

"Until August 1914,” wrote the historian AJP Taylor, an “Englishman could pass through life and hardly notice the existence of the state. [Government] left the adult citizen alone.”

How different it is today. From the moment he gets out of bed in the morning, an Englishman’s life is overseen by officialdom.

As he switches on a bedside light, the energy comes from a market supervised by the state. As he dresses, he does so in clothes imported according to official trade quotas. Government subsidises the sugar and corn in his cereal bowl.

Walking out the front door, there’s a good chance he steps out of a house designed to conform to state specifications. Heading off to work, there is a one-in-five chance he is off to work for government. Out of his income, by far the largest bill he must pay is not the mortgage, nor the cost of food or clothes. Rather it is the bill he must pay for government. For every £100 he earns that day, £46 will end up going to pay for officialdom.

Across much of the Western world, government has now grown to a size that would have seemed unthinkable to mainstream politicians just a generation ago. Many supposedly free-market countries now have a larger state sector than those that spent most of the past century following Marx.

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Like the Marxist model, the West’s big government approach cannot work indefinitely. Indeed, it is bust.

The global financial crisis is not a global crisis. It is a Western crisis, one ultimately caused by the fact that Western governments have lived beyond the ability of the rest of us to pay for them.

Like the fantasist who pays for a lifestyle he cannot afford with credit cards, we have funded our big government model by borrowing. So much so that rich Western nations are in danger of growing poor.

In Greece, Spain and Portugal, interest payments on the debt now grow faster than the debt can be paid back. For all the talk of austerity, public debt in Britain under the Coalition will approximately double in just five years. In America, federal government debt is now so large every US citizen faces the equivalent of $11,000 (£6,770) in interest payments each year.

Faced with runaway debts, governments have begun to appropriate ever more wealth to pay for bloated state bureaucracies. The result is relative – and even absolute – economic decline.

In 1990, the West accounted for more than 80 per cent of global GDP. Today it accounts for less than 60 per cent. Within seven or eight years, it is likely to account for less than half.

A stagnating West has been maintaining her living standards by borrowing off the dynamic, productive non-Western world. Within the space of a generation, the West has gone from a position of global economic pre-eminence to bailout beggar.

What went wrong?

We are bust financially because we are bankrupt politically. Western democracy once kept government small. Those with the kratos – “power” – were answerable to the demos – the people. And because the demos were expected to pay for the grand ideas and ambitions of those with the kratos, they generally voted to keep government small.

Politicians today might be regarded as expropriators for more government. But the legislatures and parliaments in which they sit came into being in the first place to prevent monarchs and ministers levying taxes without the consent of the people.

Taxation, in the words of King Louis XIV’s finance minister, Jean-Baptiste Colbert, is the art of “plucking the goose to obtain the largest amount of feathers with the smallest amount of hissing”. Starting about a hundred years ago, those with the kratos discovered ways of extracting more feathers without the geese noticing.

It was not the extension of the franchise in the 19th century that led to the growth of big government. Rather it was unequal – so-called “progressive” – taxation. This allowed the governing to extract more feathers from a minority of the geese at any one time, thereby confining the hissing to a few. Then – particularly over the past 40 years – came the systematic debauching of the currency, which transferred wealth from the people to the state, without many geese even realising.

However successful at fleecing us, this big government model is unsustainable. The three pillars on which it rests – excessive borrowing, unequal taxation and manipulation of the money – are starting to crack.

Increasingly Western governments are discovering that they cannot keep borrowing money in order to live beyond their tax base. Nor can they count on massed ranks of geese waiting to be plucked via the payroll, as there once were. When so much is just a mouse-click away, it is not only the very rich geese that can take flight. In an age of digital money, governments are going to find it harder to continuously debauch the money.

It is not just the maths that says the big government model has failed. The public policy outcomes it has produced have been appalling.

Not answerable to the people, the West’s governing elites – the civil servants, central bankers, academics, technocrats – answer only to themselves. Unproven theories have been elevated to the status of dogma. Grand follies – from the idea of European monetary union to the notion that we might engineer economic prosperity – have been pursued by those who believe that they can arrange human social and economic affairs by grand design. From Fannie Mae to banking failures, the result has been a series of catastrophic public policy blunders.

Should we despair? Actually, no.

The West is on the cusp of a dramatic transformation, driven by the failure of our elites, of technology and maths. At the precise moment that big government becomes unaffordable, the digital revolution makes it possible to do without it.

The internet is a sprawling network of organic and spontaneous design. Each time you do a Google search, you are harnessing the wisdom and knowledge of millions. The web is a collective endeavour, without any central directing authority. It makes collective action and intelligence, free from any directing authority, possible on a size and scale that was previously impossible. Collectivism without the state – the dream of every anarchist in history – begins to seem possible, practical and mainstream.

When I was growing up in the 1980s, the idea that everyone might one day have their own personalised radio station would have seemed absurd. Yet today a personalised radio station is pretty much what millions of people have on their iPods and Spotify playlists.

Government spends a great deal of money commissioning public services on behalf of you and your family – about £30,000 per family this year. Imagine if you could commission services bought in your name for yourself? A personalised health account, with your own medical records on your own app. Or, instead of a national curriculum, why not a tailor-made one made for your child, paid for out of a personalised learning account?

All a bit fanciful, I hear you say. It is far easier to imagine than the idea of an iPlayer would have seemed 20 years ago.

The digital revolution will reinvigorate the West, lifting us out of our big-government-induced stupor. The West arose because Europe, unlike the empires of the Ming, the Mughals or the Ottomans, was never politically centralised. Europe progressed because no oligarchy could ever impose its idea of what progress should look like. Since the Treaty of Rome, Europe has stagnated because a centralised elite is trying to run a whole continent on the basis of blueprints.

Maths and technology are about to do to the grand planners in the West what the collapse of Communism did to the socialist planners in the old Soviet bloc. We are about to be set free not only from the grand plans, but from the conceit of the grand planners.

Cheer up! The days of Big Government are coming to an end.

* 'The End of Politics and the Birth of iDemocracy’ (Biteback) is published October 1, and available to pre-order from Telegraph Books at £9.99 + £1.10 p&p. Call 0844 871 1516 or visit books.telegraph.co.uk